While we expect corporate restructuring programs to act as
a cash drain during 2011-12, we're certainly hoping for some
improvement in the operating margins. We currently value
Kimberly-Clark with a $
69.80 Trefis price estimate of its stock
, which is roughly a 6% premium to its current market
price.

Concerned About EBITDA Margins

Kimberly-Clark closed 2010 with a 3.3% increase in sales.
However, the EBITDA margin declined primarily on account of
inflation in raw material costs and restructuring
initiatives. These pressures very much still persist, perhaps
in greater magnitude than last year. Given the inflationary
environment, we expect rising raw material costs to continue
putting downward pressures on gross margins.

Overhead costs will stay elevated, in part due to the Pulp
& Tissue Restructuring Program that will likely incur
costs to the tune of half a billion dollars in 2011-12
knocking down EBITDA margins. We wrote about this in a note
titled Kimberly-Clark Shuts Pulp Business to Focus on
Profitability & Core Brands.

Price Increases to Alleviate
CostPressures

To combat cost inflation, Kimberly-Clark announced price
increases in March ranging from 3% to 7% in diapers and
around 7% in tissues, to be implemented in the second and
third quarter of this fiscal year for its North American
business
.

We look for any indications of continued price increases
or additional ones to help offset costs.

Other Areas to Watch

Restructuring programs in the past have strained
Kimberly-Clark's cash balance, and we look for signs that
these initiatives will translate into greater efficiency in
operations and improved EBITDA margins in the future. You can
drag the graphs below to see the impact on stock price
estimate.

Both baby care and feminine care make up more than 30% of
our $69.80Trefis price estimate of Kimberly-Clark's
stock.

With Kimberly-Clark's plans of raising prices in the
second half of this fiscal year, we expect the management to
employ more focused advertising and marketing to sustain its
market share in spite of rising prices. You can drag the
graphs below to see the impact on stock price estimate.

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